James Lee at 1up.com has posted an article explainning some of the horrors linked to gold farming. Here's a quote:

If the term sounds familiar, it's because of Lee Caldwell. The notorious MMORPG scripter got busted four years ago for admitting that his company, BlackSnow, hired workers in Tijuana to earn gold by "farming" in Ultima Online. Caldwell sold that in-game tender online for a handsome real-world profit while only paying his employees pennies on the dollar. Since 1998, the second-party market for MMORPG loot has steadily grown. Last year alone, this newfound industry grossed roughly $500 million, according to Bob Kiblinger of UOTreasures. CGW decided it was high time to go underground and find some of the key players who are going after a piece of the action.